The Effectiveness of Source Tagging in Combating Organized Retail Crime

As the University of Florida reported in the annual National Retail Security Survey, North American retailers lost $40.5 billion to theft in 2006. A significant part of that loss is due to Organized Retail Crime (ORC), as estimated by the Federal Bureau of Investigation (FBI).

Both the Retail Industry Leaders Association (RILA) and National Retail Federation (NRF) are working vigorously to combat Organized Retail Crime. RILA is a trade association of the largest and fastest growing companies in the retail industry. The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution. NRF and Food Marketing Institute (FMI) are part of the ORC Coalition - a cross industry group led by RILA, to proactively develop legislation to attack the ORC problem.


Driven by the demands of the retail community, source tagging is the application of EAS tags and labels by a manufacturer during the manufacturing process. Retailers work in concert with the manufacturers of highly pilfered goods to ensure products are tagged, shelf ready and openly displayed for consumers to conveniently purchase.

For the retailer, the benefits of source tagging are increased profitability due to product availability and labor savings at the store level with 100% tag compliance. Consequently tag compliance is directly related to shrink reduction. For the manufacturer, the benefit of source tagging is brand protection because the product stays on the shelf.

Paul Jones, Vice President of Loss Prevention for RILA, is not only a loss prevention expert but also supports the use of some of the best in class solutions for today's ORC. "With over 20 years of loss prevention experience in the retail industry and having led an organized crime task force at the store level, you must deploy proactive, best in class measures to deter ORC. One such measure is to defeat foil-lined bag theft frequently used by shoplifters."

Acousto-Magnetic (AM) systems with AM tags and labels are the only solution available today capable of detecting security tags inside foil-lined bags, metal shopping carts or on products containing non-ferrous metal. Sensormatic has distributed over 32 billion labels for source tagging since the inception of the program in the 90's. Source tagging allows retailers to create a safer shopping environment with better access to more conveniently displayed products for these high theft items. Additional benefits for retailers include reduced in-store labor costs, increased focus on the customer, improved merchandising opportunities, reduced out of stocks and increased speed of products to selling floor to drive increased sales.

"Because the world is networked 24-7 by criminals, they can sell stolen goods on the Internet for a 70 percent profit. Consequently the more lucrative the crime the more sophisticated the technology must be to combat the crime," continues Mr. Jones. "Retailers are recognizing the need for the best in class solutions to effectively fight ORC today."

Filed under Source Tagging; Loss PreventionKeywords electronic article surveillance; acousto-magnetic; EAS; loss prevention; shoplifting; shrink

Published on 1/13/2008 Permalink


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